annual financial statements · arising from other financial instruments is not considered...

Annual Financial Statements

December 31, 2016

Steadyhand Savings FundSteadyhand Income FundSteadyhand Founders FundSteadyhand Equity FundSteadyhand Global Equity FundSteadyhand Small-Cap Equity Fund

KPMG LLP PO Box 10426 777 Dunsmuir Street Vancouver BC V7Y 1K3 Canada Telephone (604) 691-3000 Fax (604) 691-3031

KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. KPMG Canada provides services to KPMG LLP.

INDEPENDENT AUDITORS’ REPORT To the Unitholders of: Steadyhand Savings Fund; Steadyhand Income Fund; Steadyhand Founders Fund; Steadyhand Equity Fund; Steadyhand Global Equity Fund; and Steadyhand Small-Cap Equity Fund (collectively, the “Funds”)

We have audited the accompanying financial statements of the Funds, which

comprise the statements of financial position as at December 31, 2016 and

2015, the statements of comprehensive income, changes in net assets

attributable to holders of redeemable units and cash flows for the years then

ended, and notes, comprising a summary of significant accounting policies

and other explanatory information.

The Manager’s Responsibility for the Financial Statements

The Manager is responsible for the preparation and fair presentation of these

financial statements in accordance with International Financial Reporting

Standards, and for such internal control as the Manager determines is

necessary to enable the preparation of financial statements that are free from

material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements

based on our audits. We conducted our audits in accordance with Canadian

generally accepted auditing standards. Those standards require that we

comply with ethical requirements and plan and perform an audit to obtain

reasonable assurance about whether the financial statements are free from

material misstatement.

An audit involves performing procedures to obtain audit evidence about the

amounts and disclosures in the financial statements. The procedures

selected depend on our judgment, including the assessment of the risks of

material misstatement of the financial statements, whether due to fraud or

error.

Steadyhand Investment Funds Page 2

In making those risk assessments, we consider internal control relevant to

the entity's preparation and fair presentation of the financial statements in

order to design audit procedures that are appropriate in the circumstances,

but not for the purpose of expressing an opinion on the effectiveness of the

entity's internal control. An audit also includes evaluating the appropriateness

of accounting policies used and the reasonableness of accounting estimates

made by management, as well as evaluating the overall presentation of the

financial statements.

We believe that the audit evidence we have obtained in our audits is

sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects,

the financial position of the Funds as at December 31, 2016 and 2015, and

their financial performance and their cash flows for the years then ended in

accordance with International Financial Reporting Standards.

Chartered Professional Accountants February 21, 2017

Vancouver, Canada

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STEADYHAND SAVINGS FUND Statements of Comprehensive Income Years ended December 31, 2016 and 2015

Notes 2016 2015

Revenue:

Interest income $ 392,104 $ 450,674

Total revenue 392,104 450,674

Expenses:

Management fees 4 31,014 33,973 Independent review committee fees 4,103 4,083

Total operating expenses 35,117 38,056 Management fee rebates (9,232) (10,713) Expenses waived or absorbed by Manager (4,103) (4,083)

(13,335) (14,796) Net operating expenses 21,782 23,260

Increase in net assets attributable to holders of

redeemable units from operations excluding distributions 370,322 427,414 Distributions to holders of redeemable units:

From net investment income (361,090) (416,701) Management fee reductions (9,232) (10,713)

(370,322) (427,414)

Increase in net assets attributable to holders of redeemable units $ - $ -


redeemable units: Series A $ - $ - Series O - -

$ - $ -


redeemable units (excluding distributions): Series A $ 118,228 $ 140,443 Series O 252,094 286,971

$ 370,322 $ 427,414


redeemable units per unit (excluding distributions): Series A $ 0.08 $ 0.08 Series O 0.08 0.09

The accompanying notes are an integral part of these financial statements.

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STEADYHAND SAVINGS FUND Statements of Changes in Net Assets Attributable to Holders of Redeemable Units Years ended December 31, 2016 and 2015

Series A Notes 2016 2015

Balance, beginning of year $ 19,591,042 $ 15,512,196 Increase in net assets attributable to

holders of redeemable units - - Redeemable unit transactions:

Issue of redeemable units 16,700,747 18,504,984 Reinvestments of distributions 113,248 129,453 Redemption of redeemable units (17,216,210) (14,555,591)

Net increase (decrease) from redeemable unit transactions (402,215) 4,078,846

Balance, end of year $ 19,188,827 $ 19,591,042

Series O Notes 2016 2015


holders of redeemable units - - Redeemable unit transactions:

Issue of redeemable units 42,399,997 15,940,000 Reinvestment of distributions 251,222 286,980 Redemption of redeemable units (25,400,000) (13,000,000)

Net increase from redeemable unit transactions 17,251,219 3,226,980



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STEADYHAND SAVINGS FUND Statements of Cash Flows Years ended December 31, 2016 and 2015

Notes 2016 2015

Cash provided by (used in): Operating activities:

Proceeds from sale of investments $ 182,327,699 $ 197,483,616 Purchases of investments (198,786,144) (205,048,106) Interest received 297,300 461,633 Management fees paid (21,888) (23,019)

(16,183,033) (7,125,876) Financing activities:

Proceeds from issue of redeemable units 58,850,059 34,917,945 Payments on redemption of redeemable units (42,626,210) (27,594,875) Cash distributions paid to holders of redeemable units (33,608) (25,088)

16,190,241 7,297,982

Increase in cash 7,208 172,106 Cash (bank indebtedness), beginning of year 42,985 (129,121)

Cash, end of year $ 50,193 $ 42,985


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STEADYHAND SAVINGS FUND Schedule of Investment Portfolio Year ended December 31, 2016

Number of Percentage Coupon Maturity or shares or Average Fair of net rate expiry date par value cost value assets % Short-Term Investments - Treasury Bills:

Province of Manitoba 0.599% 03/08/2017 2,300,000 $ 2,296,831 $ 2,296,831 Province of Ontario 0.569% 02/01/2017 4,750,000 4,738,833 4,738,834 Province of Ontario 0.619% 03/08/2017 2,100,000 2,095,275 2,095,275 Province of Ontario 0.630% 05/17/2017 4,000,000 3,989,098 3,989,097 Total short-term investments - Treasury Bills 13,120,037 13,120,037 19.9

Short-Term Investments - Promissory Notes:

Province of Saskatchewan PN 0.582% 01/09/2017 4,500,000 4,490,541 4,490,541 Province of Saskatchewan PN 0.631% 04/03/2017 2,350,000 2,344,956 2,344,956 Total short-term investments - Promissory Notes 6,835,497 6,835,497 10.3

Short-Term Investments - Bankers’ Acceptance:

Bank of Montreal BA 0.797% 01/09/2017 2,500,000 2,499,400 2,499,400 Bank of Montreal BA 0.819% 02/17/2017 1,200,000 1,198,440 1,198,440 Canadian Imperial Bank of Commerce BA 0.810% 01/25/2017 2,500,000 2,496,244 2,496,244 Royal Bank of Canada BA 0.830% 03/06/2017 350,000 349,412 349,412 Royal Bank of Canada BA 0.848% 03/30/2017 2,500,000 2,494,725 2,494,724 Royal Bank of Canada BA 0.851% 05/01/2017 1,800,000 1,793,268 1,793,268 Toronto-Dominion Bank of Canada BA 0.809% 03/31/2017 950,000 947,502 947,502 Total short-term investments - Bankers’ Acceptance 11,778,991 11,778,990 17.8

Short-Term Investments - Discount Commercial Paper:

Enbridge Pipelines Inc. CP 0.819% 01/13/2017 1,750,000 1,747,823 1,747,823 Honda Canada Finance Inc. CP 0.869% 05/03/2017 1,500,000 1,494,381 1,494,381 Hydro One Inc. CP 0.899% 02/07/2017 2,800,000 2,790,787 2,790,788 Inter Pipeline (Corridor) Inc. CP 0.911% 01/06/2017 1,800,000 1,795,518 1,795,518 Manulife Bank of Canada CP 0.929% 03/15/2017 1,500,000 1,493,535 1,493,535 Transcanada PipeLines CP 0.872% 03/10/2017 2,000,000 1,995,520 1,995,520 Total short-term investments - Discount Commercial Paper 11,317,564 11,317,565 17.1

Short-Term Investments - Bearer Deposit Notes:

Bank of Nova Scotia BDN 0.970% 03/06/2017 2,000,000 1,990,580 1,990,580 Manulife Bank of Canada BDN 0.930% 05/23/2017 1,000,000 995,410 995,410 Total short-term investments - Bearer Deposit Notes 2,985,990 2,985,990 4.5

Total short-term investments 46,038,079 46,038,079 69.6 Bonds Corporate Bonds:

Bank of Montreal FRN CP 1.168% 04/10/2017 1,000,000 1,000,000 1,000,000 Bank of Nova Scotia FRN CP 1.070% 10/11/2017 2,000,000 2,000,000 2,000,000 Canadian Imperial Bank of Commerce CP 1.009% 03/08/2017 1,000,000 1,000,000 1,000,000 Caterpillar Finance Services Ltd. CP 2.630% 06/01/2017 1,750,000 1,762,557 1,762,557 CU Inc. CP 6.145% 11/22/2017 2,827,000 2,953,154 2,953,154 Daimler Canada Finance Inc. CP 2.280% 02/17/2017 1,675,000 1,677,250 1,677,250 Genesis Trust II CP 2.295% 02/15/2017 1,500,000 1,502,499 1,502,499 Greater Toronto Airport Authority CP 4.850% 06/01/2017 1,000,000 1,016,119 1,016,119 John Deere Canada Funding Inc. CP 1.950% 04/12/2017 1,750,000 1,754,830 1,754,830 Master Credit Card Trust CP 2.626% 01/21/2017 1,500,000 1,501,403 1,501,403 Toyota Credit Canada Inc. CP 2.450% 02/27/2017 1,695,000 1,698,777 1,698,777 Wells Fargo Canada Corp. CP 2.774% 02/09/2017 1,800,000 1,803,482 1,803,482 Total corporate bonds 19,670,071 19,670,071 29.7

Total Investment Portfolio 65,708,150 65,708,150 99.3 Other Net Assets 461,090 0.7 Total Net Assets $ 66,169,240 100.0


STEADYHAND SAVINGS FUND Discussion of Financial Instruments and Risk Management Years ended December 31, 2016 and 2015

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1. Financial risk management:

The Fund is exposed to various types of financial risks that are associated with its investment strategies,

financial instruments and market in which it invests. These include credit risk, liquidity risk and market risk

which consists of currency risk, interest rate risk and other price risk. For a comprehensive discussion of the

risks applicable to the Funds refer to note 10.

The Fund’s objective is to provide a reasonably stable level of current income, while also preserving capital,

through investing in short-term debt instruments.

Capital preservation is key. The Fund invests in a number of short-term debt instruments, including treasury

bills, high-grade short-term corporate bonds, banker’s acceptances and commercial paper. The Manager

seeks to add value by employing a combination of relatively conservative strategies to enhance the fund’s

yield. The Fund is Canada-focused: the portfolio manager invests primarily in money market instruments

issued by Canadian governments and corporations.

Financial risks applicable to the Steadyhand Savings Fund are discussed in more detail below.

(a) Credit risk:

The majority of the credit risk to which the Fund is exposed is concentrated in debt securities. Credit risk

arising from other financial instruments is not considered significant. At December 31, 2016 and 2015,

the Fund was invested in debt securities with the following credit quality:

December 31, December 31, 2016 2015 2016 2015

Rating:

AAA $ 19,911,129 $ 9,216,320 30.1% 18.7% AA 34,829,629 35,473,755 52.8% 71.9% A 10,967,392 4,559,630 16.6% 9.2%

Total $ 65,708,150 $ 49,249,705 99.5% 99.8%

(b) Liquidity risk:

The Fund’s redeemable units are due on demand. The Fund’s remaining non-derivative liabilities are

due within twelve months of the year-end of the Fund. The Fund has no derivative liabilities as at the

period end (2015 - nil).

(c) Market risk:

(i) Interest rate risk:

The majority of interest rate risk arises from debt securities held in the Fund’s investment portfolio.

A summary of the Fund’s interest rate exposure analyzed by the earlier of contractual re-pricing or

maturity date is as follows. Less than 1 to 3 3 months 1 to 5 More than December 31, 2016 1 month months to 1 year years 5 years Total Debt securities $ 14,530,929 $ 30,073,448 $ 21,103,773 $ - $ - $ 65,708,150


7

1. Financial risk management (continued):

(c) Market risk (continued):

(i) Interest rate risk (continued): Less than 1 to 3 3 months 1 to 5 More than December 31, 2015 1 month months to 1 year years 5 years Total Debt securities $ 12,938,732 $ 7,123,174 $ 28,187,799 $ 1,000,000 $ - $ 49,249,705

The Manager has determined that a fluctuation in interest rates of 25 basis points is reasonably

possible, considering the economic environment in which the Fund operates. As at December 31,

2016, had interest rates increased or decreased by 25 basis points, with all other factors remaining

constant, net assets attributable to redeemable units would have increased or decreased by

approximately $164,270 (2015 - increased or decreased by $123,124). In practice, actual results

may differ from this sensitivity analysis and the difference could be material.

(ii) Currency risk:

The Fund is not exposed to currency risk as its financial assets and liabilities are all denominated in

Canadian dollars.

(iii) Other price risk:

There were no significant concentrations of risk to issuers at December 31, 2016 or 2015. The

Fund held the following securities which exceeded 5% of the net assets attributable to the holders

of redeemable units:

At December 31, 2016:

Percentage Coupon Maturity of net rate date assets

Province of Ontario Treasury Bill 0.569% February 1, 2017 7.1% Province of Saskatchewan Promissory Note 0.582% January 9, 2017 6.7% Province of Ontario Treasury Bill 0.630% May 17, 2017 6.0%



Province of Ontario Treasury Bill 0.571% April 6, 2016 14.0% Province of Newfoundland and Labrador Treasury Bill 0.624% January 25, 2016 11.1% Royal Bank of Canada Bearer Deposit Note 0.822% February 26, 2016 6.3% Bank of Nova Scotia BA 0.852% June 30, 2016 5.6% Province of Ontario Treasury Bill 0.622% April 27, 2016 5.1%


8



(iii) Other price risk (continued):

All these securities have maturities under a year and are highly liquid short-term paper.

Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate

because of changes in market prices. The investments of the Fund are subject to normal market

fluctuations and the risks inherent in investment in financial markets. The maximum risk resulting

from financial instruments held by the Fund is determined by the fair value of the financial

instruments. The Manager moderates this risk through a careful selection of securities within

specified limits and the Fund’s market price risk is managed through diversification of the Fund.

The Investment Manager monitors the Fund’s overall market positions on a daily basis and

positions are maintained within established ranges.

As at December 31, 2016 and 2015, the Fund did not have significant exposure to other price risk.

2. Fair value of financial instruments:

For a general discussion of the Funds fair value measurements, refer to note 11.

(a) Fair value hierarchy - financial instruments measured at fair value:

The table below analyses financial instruments measured at fair value at the reporting date by the level

in the fair value hierarchy into which the fair value measurement is categorized. The amounts are based

on the values recognized in the statement of financial position.

All fair value measurements below are recurring.

December 31, 2016 Level 1 Level 2 Level 3 Total

Investments $ - $ 65,708,150 $ - $ 65,708,150


Investments $ - $ 49,249,705 $ - $ 49,249,705

There were no transfers between Levels 1, 2 and 3 during the period ended December 31, 2016 and

2015.

10

STEADYHAND INCOME FUND Statements of Comprehensive Income

Years ended December 31, 2016 and 2015

Notes 2016 2015

Revenue: Interest income $ 3,719,015 $ 3,607,069 Dividend income 1,096,702 1,207,076 Distributions received from underlying fund 534,326 777,942 Other income 220,360 242,879 Foreign exchange gain (loss) (38,524) 18,119 Changes in fair value of investments and derivatives: 6

Net realized gain 2,875,293 4,102,621 Net change in unrealized appreciation

(depreciation) - investments 3,131,175 (6,956,258) 11,538,347 2,999,448

Expenses: Management fees 4 971,839 1,000,845 Withholding taxes 7 602 3,171 Transaction costs 8 48,692 67,986 Independent review committee fees 4,103 4,083 1,025,236 1,076,085

Management fee reductions (249,858) (254,836) Expenses waived or absorbed by Manager (4,103) (4,083)

(253,961) (258,919)

Net operating expenses 771,275 817,166

Increase in net assets attributable to holders of redeemable units from operations excluding distributions 10,767,072 2,182,282

Distributions to holders of redeemable units: From net investment income (4,587,657) (4,845,764) From net realized gain on investment (3,695,203) (3,497,690) Management fee rebates (249,858) (254,836)

(8,532,718) (8,598,290)

Increase (decrease) in net assets attributable to holders of redeemable units $ 2,234,354 $ (6,416,008)

Increase (decrease) in net assets attributable to holders of redeemable units:

Series A $ 753,530 $ (3,745,762) Series O 1,480,824 (2,670,246)

$ 2,234,354 $ (6,416,008)

Increase in net assets attributable to holders of redeemable units (excluding distributions):

Series A $ 5,265,298 $ 959,446 Series O 5,501,774 1,222,836

$ 10,767,072 $ 2,182,282

Increase in net assets attributable to holders of redeemable units per unit (excluding distributions):

Series A $ 0.62 $ 0.11 Series O 0.74 0.18


11

STEADYHAND INCOME FUND Statements of Changes in Net Assets Attributable to Holders of Redeemable Units Years ended December 31, 2016 and 2015


Balance, beginning of year $ 90,920,422 $ 94,128,679 Increase (decrease) in net assets attributable to

holders of redeemable units 753,530 (3,745,762) Redeemable unit transactions:

Issue of redeemable units 9,909,376 11,683,943 Reinvestments of distributions 4,189,966 4,407,244 Redemption of redeemable units (10,846,202) (15,553,682)

Net increase from redeemable unit transactions 3,253,140 537,505




holders of redeemable units 1,480,824 (2,670,246) Redeemable unit transactions:

Issue of redeemable units 6,250,000 7,725,000 Reinvestment of distributions 4,020,945 3,893,085




12

STEADYHAND INCOME FUND Statements of Cash Flows Years ended December 31, 2016 and 2015

Notes 2016 2015


Proceeds from sale of investments $ 494,879,284 $ 420,022,153 Purchase of investments (498,317,942) (434,561,211) Realized gain (loss) on futures (186,322) 29,001 Realized (gain) loss on forwards 88,188 (234,039) Interest and dividends received 5,846,044 5,435,257 Balances due from broker 7,668,665 (7,668,665) Balances due to broker (14,116,866) 14,116,866 Management fees paid (722,309) (738,401) Foreign withholding taxes paid (602) (3,171)



5,015,446 3,592,913

Increase (decrease) in cash 153,586 (9,297) Cash, beginning of year 214,644 203,888 Effect of exchange rate fluctuations on cash (40,377) 20,053

Cash, end of year $ 327,853 $ 214,644


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STEADYHAND INCOME FUND Schedule of Investment Portfolio Year ended December 31, 2016


Canada 0.565% 01/26/2017 100,000 $ 99,719 $ 99,719 Total short-term investments - Treasury Bills 99,719 99,719 0.1

Short-Term Investments - Bankers’ Acceptance:

Bank of Montreal BA 0.791% 01/09/2017 500,000 499,870 499,870 Bank of Montreal BA 0.821% 03/13/2017 100,000 99,815 99,815 Canadian Imperial Bank of Commerce BA 0.822% 02/14/2017 400,000 399,460 399,460 Royal Bank BA 0.803% 01/09/2017 1,000,000 999,427 999,427 Royal Bank BA 0.781% 02/28/2017 400,000 399,240 399,240 Royal Bank BA 0.831% 02/28/2017 750,000 748,783 748,783 Toronto Dominion Bank BA 0.748% 01/05/2017 350,000 349,495 349,495 Toronto Dominion Bank BA 0.817% 01/19/2017 7,650,000 7,644,102 7,644,102 Toronto Dominion Bank BA 0.782% 02/07/2017 200,000 199,616 199,616 Total short-term investments - Bankers’ Acceptance 11,339,808 11,339,808 6.1

Total short-term investments 11,439,527 11,439,527 6.2

Federal Bonds:

Canada 4.250% 06/01/2018 693,000 731,511 727,321 Canada 1.750% 09/01/2019 848,000 871,719 868,319 Canada 0.750% 09/01/2020 137,000 136,363 135,811 Canada 2.500% 06/01/2024 1,089,000 1,175,854 1,163,825 Canada 2.250% 06/01/2025 334,000 368,096 350,236 Canada 1.500% 06/01/2026 1,374,000 1,336,971 1,348,306 Canada 3.500% 12/01/2045 5,908,000 7,750,774 7,344,963 Canada Housing Trust No.1 2.000% 12/15/2019 3,451,000 3,575,571 3,537,377 Canada Housing Trust No.1 2.400% 12/15/2022 1,611,000 1,714,893 1,673,144 Canada Housing Trust No.1 1.900% 09/15/2026 535,000 522,123 520,507

Total federal bonds 18,183,875 17,669,809 9.4 Provincial Bonds:

Hydro Quebec Interest Strip Bond 08/15/2022 1,615,000 1,357,614 1,432,742 Province of Alberta 1.350% 09/01/2021 990,000 995,277 976,692 Province of Alberta 3.100% 06/01/2024 270,000 287,672 285,202 Province of Alberta 2.350% 06/01/2025 651,000 643,435 647,110 Province of Alberta 3.500% 06/01/2031 275,000 315,816 287,698 Province of Alberta 3.900% 12/01/2033 23,000 25,677 25,026 Province of Alberta 4.500% 12/01/2040 32,000 42,026 38,193 Province of Alberta 3.450% 12/01/2043 91,000 104,902 92,991 Province of Alberta 3.300% 12/01/2046 1,070,000 1,065,425 1,067,947 Province of British Columbia 2.300% 06/18/2026 155,000 154,758 154,030 Province of British Columbia 4.700% 06/18/2037 174,000 231,399 215,057 Province of British Columbia 4.300% 06/18/2042 1,214,000 1,452,573 1,453,084 Province of British Columbia 3.200% 06/18/2044 608,000 641,759 612,621 Province of British Columbia 2.800% 06/18/2048 459,000 470,810 428,982 Province of Manitoba 6.300% 03/05/2031 140,000 186,147 190,116 Province of Manitoba 5.700% 03/05/2037 99,000 132,822 132,528 Province of Manitoba 4.600% 03/05/2038 103,000 120,343 121,905 Province of Manitoba 4.050% 09/05/2045 617,000 725,129 689,570 Province of New Brunswick 2.850% 06/02/2023 461,000 448,580 480,070 Province of New Brunswick 5.500% 01/27/2034 5,000 6,389 6,341 Province of New Brunswick 3.550% 06/03/2043 190,000 209,118 189,913 Province of New Brunswick 3.800% 08/14/2045 267,000 265,080 279,078 Province of New Brunswick 3.100% 08/14/2048 100,000 99,517 92,197 Province of Newfoundland and Labrador 2.300% 06/02/2025 864,000 836,117 830,422 Province of Newfoundland and Labrador 3.000% 06/02/2026 1,287,000 1,285,507 1,292,345 Province of Newfoundland and Labrador 3.300% 10/17/2046 799,000 744,724 728,707 Province of Newfoundland and Labrador 3.700% 10/17/2048 133,000 132,896 131,380 Province of Nova Scotia 4.700% 06/01/2041 76,000 83,265 91,799

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STEADYHAND INCOME FUND Schedule of Investment Portfolio (continued) Year ended December 31, 2016

Number of Percentage Coupon Maturity or shares or Average Fair of net rate expiry date par value cost value assets % Provincial Bonds (continued):

Province of Ontario 4.000% 06/02/2021 6,162,000 6,931,312 6,784,904 Province of Ontario 3.150% 06/02/2022 9,181,000 10,030,226 9,796,085 Province of Ontario 2.850% 06/02/2023 875,000 945,592 916,837 Province of Ontario 2.600% 06/02/2025 74,000 75,501 75,198 Province of Ontario 2.400% 06/02/2026 2,102,000 2,145,831 2,086,815 Province of Ontario 3.500% 06/02/2043 1,101,000 1,275,288 1,151,422 Province of Ontario 3.450% 06/02/2045 7,212,000 7,905,219 7,497,453 Province of Ontario Generic Coupon Strip 12/02/2028 490,000 320,952 340,827 Province of Ontario Generic Coupon Strip 06/02/2029 348,000 222,585 236,687 Province of Quebec 4.250% 12/01/2021 957,000 1,102,305 1,071,153 Province of Quebec 3.500% 12/01/2022 5,251,000 5,899,818 5,709,650 Province of Quebec 2.750% 09/01/2025 1,642,000 1,724,124 1,685,319 Province of Quebec 6.000% 10/01/2029 563,000 720,584 749,747 Province of Quebec 6.250% 06/01/2032 1,482,000 2,026,904 2,058,911 Province of Quebec 5.000% 12/01/2038 189,000 219,793 240,474 Province of Quebec 3.500% 12/01/2045 1,027,000 1,138,905 1,072,538 Total provincial bonds 55,749,716 54,447,766 29.1

Corporate Bonds:

407 International Inc. CP 3.830% 05/11/2046 661,000 690,143 663,084 407 International Inc. CP 3.600% 05/21/2047 307,000 306,990 296,283 Alimentation Couche-Tard Inc. CP 3.319% 11/01/2019 628,000 627,940 653,757 Alimentation Couche-Tard Inc. CP 3.899% 11/01/2022 126,000 136,092 134,550 Alimentation Couche-Tard Inc. CP 3.600% 06/02/2025 73,000 73,845 74,918 Bank of Montreal CP 3.400% 04/23/2021 2,203,000 2,344,991 2,335,912 Bank of Nova Scotia CP 2.400% 10/28/2019 1,150,000 1,149,778 1,175,095 Bank of Nova Scotia CP 2.130% 06/15/2020 536,000 540,280 542,736 Bell Canada CP 3.250% 06/17/2020 426,000 448,872 444,880 Bell Canada CP 4.950% 05/19/2021 157,000 174,881 175,114 Bell Canada CP 3.150% 09/29/2021 342,000 344,296 356,389 Bell Canada CP 2.000% 10/01/2021 807,000 806,711 798,361 Bell Canada CP 3.350% 03/22/2023 266,000 271,741 277,052 Bell Canada CP 4.700% 09/11/2023 1,097,000 1,139,997 1,222,751 Bell Canada CP 3.550% 03/02/2026 301,000 320,321 309,099 Bell Canada CP 2.900% 08/12/2026 500,000 500,585 483,940 Brookfield Asset Management Inc. CP 5.300% 03/01/2021 815,000 878,289 899,095 Brookfield Asset Management Inc. CP 5.040% 03/08/2024 746,000 774,286 822,353 Canadian Imperial Bank CP 2.220% 03/07/2018 87,000 86,648 88,050 Canadian Imperial Bank CP 1.640% 07/12/2021 298,000 297,872 293,782 Canadian Natural Resources CP 2.890% 08/14/2020 183,000 184,912 185,439 Canadian Natural Resources CP 3.310% 02/11/2022 676,000 693,302 690,650 Choice Properties LP CP 3.600% 09/20/2022 446,000 462,615 465,195 Choice Properties REIT CP 3.196% 03/07/2023 633,000 636,481 643,844 Choice Properties REIT CP 4.903% 07/05/2023 610,000 680,728 676,949 Choice Properties REIT CP 4.293% 02/08/2024 296,000 319,641 317,539 Choice Properties REIT CP 4.055% 11/24/2025 475,000 484,653 495,366 CU Inc. CP 6.215% 03/06/2024 895,000 1,155,218 1,104,483 CU Inc. CP 4.543% 10/24/2041 59,000 70,518 66,163 CU Inc. CP 4.722% 09/09/2043 415,000 508,124 479,041 CU Inc. CP 4.085% 09/02/2044 300,000 336,597 314,761 CU Inc. CP 3.964% 07/27/2045 43,000 48,880 44,159 Empire Life Insurance CP 3.383% 12/16/2026 309,000 309,000 309,918 Enbridge Gas Distribution Inc. CP 4.770% 12/17/2021 241,000 277,581 272,639 Enbridge Gas Distribution Inc. CP 3.150% 08/22/2024 431,000 437,233 450,238 Enbridge Gas Distribution Inc. CP 4.000% 08/22/2044 300,000 313,470 308,533 Enbridge Inc. CP 4.770% 09/02/2019 88,000 95,360 94,729 Enbridge Inc. CP 4.530% 03/09/2020 647,000 698,341 696,543 Enbridge Inc. CP 4.260% 02/01/2021 1,245,000 1,311,401 1,340,983 Enbridge Inc. CP 3.160% 03/11/2021 918,000 930,849 947,965 Enbridge Inc. CP 3.940% 06/30/2023 422,000 420,717 448,399 Enbridge Inc. CP 4.240% 08/27/2042 145,000 140,702 136,524 Enbridge Pipelines Inc. CP 3.000% 08/10/2026 108,000 109,281 107,086

15


Number of Percentage Coupon Maturity or shares or Average Fair of net rate expiry date par value cost value assets % Corporate Bonds (continued):

Enbridge Pipelines Inc. CP 4.550% 09/29/2045 138,000 147,580 143,566 Enbridge Pipelines Inc. CP 4.130% 08/09/2046 11,000 11,247 10,736 First Capital Realty Inc. CP 3.900% 10/30/2023 181,000 187,016 189,266 FortisBC Energy Inc. CP 5.800% 05/13/2038 412,000 569,090 531,209 GE Capital Canada Funding Co. CP 4.600% 01/26/2022 674,000 755,711 757,513 Greater Toronto Airports Authority CP 7.050% 06/12/2030 163,000 224,694 226,414 H&R REIT CP 2.923% 05/06/2022 252,000 252,242 250,966 Husky Energy Inc. CP 5.000% 03/12/2020 300,000 328,452 325,136 Husky Energy Inc. CP 3.550% 03/12/2025 195,000 201,396 197,336 Hydro One Inc. CP 1.480% 11/18/2019 573,000 572,983 573,674 Hydro One Inc. CP 1.840% 02/24/2021 880,000 892,824 883,374 Hydro One Inc. CP 2.770% 02/24/2026 210,000 220,473 211,519 Hydro One Inc. CP 7.350% 06/03/2030 231,000 336,375 323,599 Hydro One Inc. CP 6.930% 06/01/2032 264,000 363,440 364,746 Hydro One Inc. CP 6.350% 01/31/2034 259,000 355,918 345,454 Hydro One Inc. CP 5.490% 07/16/2040 5,000 6,535 6,292 Hydro One Inc. CP 4.390% 09/26/2041 49,000 51,687 53,699 Hydro One Inc. CP 3.910% 02/23/2046 52,000 57,067 53,045 Industrial Alliance Inc. CP 2.640% 02/23/2027 340,000 339,915 337,990 Industrial Alliance Inc. CP 3.300% 09/15/2028 512,000 517,291 517,269 Intact Financial Corp. CP 5.410% 09/03/2019 525,000 596,488 575,562 Intact Financial Corp. CP 4.700% 08/18/2021 329,000 358,071 366,257 Loblaw Cos Ltd CP 4.860% 09/12/2023 1,419,000 1,595,197 1,591,834 Loblaw Cos Ltd CP 6.500% 01/22/2029 96,000 124,448 118,097 Manufacturers Life Insurance Co. CP 2.926% 11/29/2023 312,000 315,334 317,203 Manufacturers Life Insurance Co. CP 3.181% 11/22/2027 531,000 546,122 546,347 National Bank of Canada CP 1.809% 07/26/2021 250,000 250,000 247,925 North West Redwater Partnership CP 4.250% 06/01/2029 53,000 57,307 56,745 North West Redwater Partnership CP 4.150% 06/01/2033 145,000 149,901 151,812 North West Redwater Partnership CP 4.750% 06/01/2037 147,000 170,620 164,867 Pembina Pipeline Corp. CP 4.890% 03/29/2021 29,000 31,952 31,824 Pembina Pipeline Corp. CP 3.710% 08/11/2026 102,000 101,958 103,013 Plenary Properties LTAP LP CP 6.288% 01/31/2044 58,639 74,225 74,973 RBC Yield Curve Deposit Note Series 16 04/18/2017 1,495,000 1,498,738 1,498,738 RioCan REIT CP 2.185% 08/26/2020 115,000 115,000 114,510 Rogers Communications Inc. CP 6.560% 03/22/2041 96,000 123,897 122,731 Royal Bank of Canada CP 2.820% 07/12/2018 3,135,000 3,181,135 3,206,113 Royal Bank of Canada CP 2.770% 12/11/2018 537,000 548,798 550,861 Royal Bank of Canada CP 2.350% 12/09/2019 1,486,000 1,485,718 1,516,523 Royal Bank of Canada CP 1.583% 09/13/2021 363,000 360,695 355,679 Royal Bank of Canada CP 1.968% 03/22/2022 1,190,000 1,172,626 1,178,983 Shaw Communications Inc. CP 5.500% 12/07/2020 444,000 496,132 492,899 Shaw Communications Inc. CP 6.750% 11/09/2039 178,000 212,364 213,356 Smart REIT CP 3.444% 08/28/2026 423,000 416,422 405,719 Sun Life Financial Inc. CP 3.100% 02/19/2026 87,000 89,493 89,210 Sun Life Financial Inc. CP 3.050% 09/19/2028 681,000 681,277 681,467 Suncor Energy Inc. CP 3.100% 11/26/2021 102,000 107,726 106,358 TELUS Corp. CP 4.850% 04/05/2044 78,000 80,882 79,701 TransCanada Pipelines Ltd. CP 3.690% 07/19/2023 81,000 86,054 86,890 Union Gas Ltd. CP 2.760% 06/02/2021 414,000 434,630 428,764 Union Gas Ltd. CP 4.850% 04/25/2022 364,000 415,823 413,436 Union Gas Ltd. CP 3.790% 07/10/2023 741,000 768,667 803,825 Union Gas Ltd. CP 3.190% 09/17/2025 123,000 132,619 127,536 Union Gas Ltd. CP 2.810% 06/01/2026 85,000 88,391 84,938 Union Gas Ltd. CP 5.200% 07/23/2040 185,000 229,110 223,829 Union Gas Ltd. CP 4.880% 06/21/2041 82,000 93,665 95,027 Union Gas Ltd. CP 4.200% 06/02/2044 184,000 185,424 194,648 Total corporate bonds 46,309,007 46,365,350 24.8

Total Bonds 120,242,598 118,482,925 63.3

16


Number of Percentage Coupon Maturity or shares or Average Fair of net rate expiry date par value cost value assets % Equities Equities - Oil and Gas:

Crescent Point Energy Corp. 48,100 897,979 877,825 Enbridge Inc. 38,900 1,954,558 2,197,851 Ｏ䌀bridge Income Fund Holdings Inc. 30,700 888,105 1,067,439 Imperial Oil Ltd. 13,600 572,258 635,256 Keyera Corp. 30,694 1,184,008 1,241,879 Peyto Exploration & Development Corp. 11,100 309,270 368,631 Suncor Energy Inc. 21,700 779,465 952,630 TransCanada Corp. 17,800 1,055,896 1,077,612 Whitecap Resources Inc. 58,300 595,813 708,928 Total equities - oil and gas 8,237,352 9,128,051 4.9

Equities - Industrial Goods and Services:

Canadian National Railway Co. 20,100 1,564,179 1,816,236 SNC–Lavalin Group Inc. 23,100 1,278,051 1,334,949 Waste Connections Inc. 5,816 354,574 612,709 WSP Global Inc. 24,424 936,140 1,091,509 Total equities - industrial goods and services 4,132,944 4,855,403 2.6

Equities - Consumer Cyclical:

Restaurant Brands International Inc. 7,000 416,433 447,650 Shaw Communications Inc. Class B 16,400 431,553 441,816 Thomson Reuters Corp. 11,100 647,046 652,236 Total equities - consumer cyclical 1,495,032 1,541,702 0.8

Equities - Consumer Products:

Cott Corp. 74,674 1,311,720 1,135,045 Loblaw Cos Ltd. 37,400 2,170,426 2,649,416 Total equities - consumer products 3,482,146 3,784,461 2.0

Equities - Financial Services:

Bank of Nova Scotia 29,200 1,830,052 2,182,992 Intact Financial Corp. 11,500 851,761 1,105,150 Manulife Financial Corp. 73,800 1,483,525 1,764,558 Royal Bank of Canada 34,800 2,477,319 3,162,276 Sun Life Financial Inc. 22,400 857,308 1,154,720 Toronto Dominion Bank 59,979 2,989,612 3,971,809 Total equities - financial services 10,489,577 13,341,505 7.0

Equities - Healthcare:

Chartwell Retirement Residences 94,662 1,028,281 1,386,798 Total equities - consumer products 1,028,281 1,386,798 0.7

Equities – Real Estate:

Brookfield Property Partners LP 78,373 1,864,961 2,298,681 Canadian Apartment Properties REIT 29,700 861,985 931,689 First Capital Realty Inc. 46,400 1,025,595 959,088 H&R REIT 21,500 462,689 480,955 RioCan REIT 18,300 490,212 487,329 Smart REIT 53,822 1,432,683 1,737,912 Total equities - real estate 6,138,125 6,895,654 3.7

Equities - Technology:

Open Text Corp. 11,300 918,755 936,996 Total equities - technology 918,755 936,996 0.5

Equities - Communications and Media:

BCE Inc. 10,500 580,373 609,315 Manitoba Telecom Services Inc. 22,300 667,439 846,508 Rogers Communications Inc. Class B 24,500 1,254,417 1,268,855 Total equities - communications and media 2,502,229 2,724,678 1.5

17


Number of Percentage Coupon Maturity or shares or Average Fair of net rate expiry date par value cost value assets % Equities (continued): Equities - Utilities and Pipelines:

Algonquin Power & Utilities Corp. 34,600 376,552 394,094 Brookfield Infrastructure Partners LP 37,260 1,058,977 1,673,719 Northland Power Inc. 9,900 234,162 230,670 Total equities – utilities and pipelines 1,669,691 2,298,483 1.2

Total Equities 40,094,132 46,893,731 24.9 Pooled Investment Funds

CC&L High Yield Bond Fund, Series I 969,145 9,989,747 9,305,050 5.0 Transaction Costs (26,186)

Total Investment Portfolio 181,739,818 186,121,233 99.4 Derivatives:

Total unrealized loss on futures contracts (Schedule 1) 146,768

Other Net Assets 1,066,478 0.6 Total Net Assets $ 187,334,479 100.0


18

STEADYHAND INCOME FUND Futures Contracts Schedule 1 Year ended December 31, 2016

Maturity Number of Fair Unrealized Description date contracts value gain (loss)

Futures United States Dollars 1.3410 March 1, 2017 (13) $ 1,787,890 $ Margins (1,641,122)

$ 146,768


STEADYHAND INCOME FUND Discussion of Financial Instruments and Risk Management Years ended December 31, 2016 and 2015

19






The Fund’s objective is to provide a reasonably stable level of income and modest capital growth, while also

preserving capital, through investing primarily in bonds, with some exposure to REITs and dividend-paying

stocks. This Fund is a diversified income product that will provide a combination of current income, modest

capital growth and inflation protection over the long-term, and is designed to serve as a core income holding

within a portfolio, if applicable.

The Fund is Canada-focused: the portfolio manager invests primarily in fixed income instruments and

income-producing securities issued by Canadian governments and corporations. The majority of the Fund's

assets are held in bonds. The manager closely monitors the attractiveness of corporate bonds in relation to

government-issued bonds, and will concentrate the fixed income portion of the portfolio wherever the best

relative value is found. A smaller portion of dividend-paying common shares and REITs are included in the

portfolio to enhance the Fund's yield and provide greater capital growth potential and protection from

inflation.

Financial risks applicable to the Steadyhand Income Fund are discussed in more detail below.

(a) Credit risk:

The majority of the credit risk to which the Fund is exposed is concentrated in debt securities. Credit

risk arising from other financial instruments is not considered significant. As at December 31, 2016 and

2015, the Fund was invested in debt securities with the following credit quality:


Rating:

AAA $ 31,473,426 $ 29,699,467 16.8% 17.3% AA 18,745,341 29,351,474 10.0% 17.1% A 59,019,829 52,048,570 31.5% 30.3% BBB 20,913,945 15,654,478 11.2% 9.1%

Total $ 130,152,541 $ 126,753,989 69.5% 73.8%

(b) Liquidity risk:


due within twelve months of the year-end of the Fund. There were no derivative liabilities at

December 31, 2016 and 2015.


20


(c) Market risk:




maturity date is as follows. Less than 1 to 3 3 months 1 to 5 More than December 31, 2016 1 month months to 1 year years 5 years Total Debt securities $ 9,592,614 $ 1,846,913 $ 1,498,739 $ 35,178,500 $ 81,805,686 $ 129,922,452

Less than 1 to 3 3 months 1 to 5 More than December 31, 2015 1 month months to 1 year years 5 years Total Debt securities $ 7,894,954 $ - $ - $ 21,612,526 $ 87,158,975 $ 116,666,455







(ii) Currency risk:

At period end, the carrying value of the Fund’s net financial assets and financial liabilities held in

individual foreign currencies expressed in Canadian dollars and as a percentage of its net assets

were as follows:

December 31, December 31, Thousands % of net Thousands % of net Currency of CAD assets of CAD assets

United States dollar $ 144.1 0.1% $ 94.6 0.1%

As at December 31, 2016, had the Canadian dollar strengthened or weakened by 1% in relation to

all foreign currencies, with all other factors remaining constant, net assets attributable to

redeemable units would have increased or decreased by approximately $1,441 (2015 - increased

or decreased by approximately $946). In practice, actual results may differ from this sensitivity

analysis and the difference could be material.


21




There were no significant concentrations of risk to issuers at December 31, 2016 and 2015. The





Province of Ontario Provincial Bond 3.150% June 2, 2022 5.2%



CC&L High Yield Bond Fund, Series I N/A N/A 8.6%

As at period end, had the respective benchmark of the Fund increased or decreased by 5%, with all

other variables held constant, net assets attributable to redeemable units would have increased or

decreased as follows: December 31, 2016 December 31, 2015 5% 5% 5% 5% Indexes Increase Decrease Increase Decrease DEX Universe Bond Index $ 5,924,146 $ (5,924,146) $ 5,438,575 $ (5,438,575) S&P/TSX Composite Index 2,809,939 (2,809,939) 3,002,396 (3,002,396) Total $ 8,734,085 $ (8,734,085) $ 8,440,971 $ (8,440,971)

In practice, actual results may differ from this sensitivity analysis and these differences could be

material.


22









Investments $ 56,198,781 $ 129,922,452 $ - $ 186,121,233 Derivative assets 146,768 - 146,768 $ 56,345,549 $ 129,922,452 $ - $ 186,268,001


Investments $ 60,047,915 $ 116,666,455 $ - $ 176,714,370 Derivative assets - 56,554 - 56,554 $ 60,047,915 $ 116,723,009 $ - $ 176,770,924

There were no transfers between Levels 1, 2 and 3 during the periods ended December 31, 2016 and

2015.

24

STEADYHAND FOUNDERS FUND Statements of Comprehensive Income Years ended December 31, 2016 and 2015

Notes 2016 2015

Revenue:

Interest income $ 1,076 $ 993 Distributions received from underlying funds 10,838,669 10,436,282 Changes in fair value of investments:

Net realized gain 2,462,382 - Net change in unrealized appreciation (depreciation) 9,194,418 (547,116)

Total revenue 22,496,545 9,890,159 Expenses:

Management fees 4 3,633,667 2,951,447 Independent review committee fees 4,103 4,083

Total operating expenses 3,637,770 2,955,530 Management fee reductions (934,654) (747,302) Expenses waived or absorbed by Manager (4,103) (4,083)

(938,757) (751,385) Net operating expenses 2,699,013 2,204,145

Increase in net assets attributable to holders of redeemable

units from operations excluding distributions 19,797,532 7,686,014 Distributions to holders of redeemable units:

From net investment income (3,437,042) (2,611,578) From net realized gain on investment (3,824,741) (4,014,696) Management fee rebates (934,654) (747,302)

(8,196,437) (7,373,576)

Increase in net assets attributable to holders of redeemable units $ 11,601,095 $ 312,438


redeemable units per (excluding distributions) $ 19,797,532 $ 7,686,014


redeemable units per unit (excluding distributions) $ 0.90 $ 0.44


25

STEADYHAND FOUNDERS FUND Statements of Changes in Net Assets Attributable to Holders of Redeemable Units Years ended December 31, 2016 and 2015



holders of redeemable units 11,601,095 312,438 Redeemable unit transactions:





26

STEADYHAND FOUNDERS FUND Statements of Cash Flows Years ended December 31, 2016 and 2015

Notes 2016 2015


Proceeds from sale of investments $ 46,748,110 $ 13,000,000 Purchase of investments (94,575,978) (73,087,825) Interest and dividends receivable 10,829,088 10,444,513 Balances due to broker - (27,569) Management fees payable (2,643,598) (2,148,080) Operating expenses paid - (43)



39,807,137 51,770,623

Increase (decrease) in cash 164,759 (48,381) Cash, beginning of year 551,984 600,365

Cash, end of year $ 716,743 $ 551,984


27

STEADYHAND FOUNDERS FUND Schedule of Investment Portfolio Year ended December 31, 2016 Number Average Fair % of net of units cost value assets Pooled Investment Funds:

Steadyhand Equity Fund, Series O 4,216,725 $ 56,051,857 $ 69,206,155 Steadyhand Global Equity Fund, Series O 7,113,781 65,102,225 70,940,756 Steadyhand Income Fund, Series O 8,200,609 91,135,947 92,407,745 Steadyhand Savings Fund, Series O 4,670,113 46,701,128 46,701,125 Steadyhand Small-Cap Equity Series O 1,597,733 23,659,169 23,907,197 Total pooled investment funds 282,650,326 303,162,978 99.8

Total Investment Portfolio 282,650,326 303,162,978 99.8 Other Net Assets 497,894 0.2 Total Net Assets $ 303,660,872 100.0 The accompanying notes are an integral part of these financial statements.

STEADYHAND FOUNDERS FUND Discussion of Financial Instruments and Risk Management Years ended December 31, 2016 and 2015

28


The Fund invests in other Steadyhand Funds, the discussion of risks immediately below looks through the

Fund’s investments and assesses the risks on this basis.





The Fund’s objective is to provide a combination of capital growth and income through investing in a

diversified collection of Canadian and foreign companies, bonds and money market securities.

The Fund invests in equities in Canada and abroad, in roughly equal proportions. The geographic allocation

of the Fund's equity investments may vary from these parameters; however, based on where the manager is

seeing the best value. The fixed income portion of the Fund primarily invests in bonds and income-producing

securities issued by Canadian governments and corporations.

Financial risks applicable to the Steadyhand Founders Fund are discussed in more detail below.

(a) Credit risk:

The majority of the credit risk to which the Fund is exposed is concentrated to its holdings in underlying

funds with investments in debt securities. Credit risk arising from other financial instruments is not

considered significant. At December 31, 2016 and 2015, the Fund was invested in debt securities with

the following credit quality:


Rating:

AAA $ 31,276,786 $ 22,074,414 10.3% 9.0% AA 33,913,065 35,176,248 11.2% 14.4% A 36,863,663 27,220,345 12.2% 11.2% BBB 10,309,835 7,360,619 3.4% 3.0%

Total $ 112,363,349 $ 91,831,626 37.1% 37.6%

(b) Liquidity risk:


due within twelve months of the year-end of the Fund. The Fund has no derivative liabilities as at



29


(c) Market risk:




maturity date is as follows. Less than 1 to 3 3 months 1 to 5 More than December 31, 2016 1 month months to 1 year years 5 years Total Debt securities $ 15,094,719 $ 23,798,027 $ 15,688,111 $ 17,341,756 $ 40,327,310 $ 112,249,923

Less than 1 to 3 3 months 1 to 5 More than December 31, 2015 1 month months to 1 year years 5 years Total Debt securities $ 14,065,106 $ 4,292,208 $ 16,985,109 $ 10,764,619 $ 40,981,502 $ 87,088,544







(ii) Currency risk:



were as follows: December 31, 2016 December 31, 2015 Thousands % of net Thousands % of net Currency of CAD assets of CAD assets

United States Dollar $ 39,630.9 13.0% $ 37,405.2 15.3% Japanese Yen 16,181.4 5.3% 14,227.5 5.8% Euro 14,054.3 4.6% 8,010.0 3.3% British Pound 12,743.9 4.2% 10,097.4 4.1% Hong Kong Dollar 5,303.1 1.7% 4,426.5 1.8% Swiss Franc 4,374.8 1.4% 3,356.6 1.4% Danish Krone 2,888.0 1.0% - - Korean Won 1,933.1 0.6% 1,133.0 0.5% Singapore Dollar 1,786.9 0.5% 1,144.3 0.5% Indonesian Rupiah 1,668.6 0.6% 1,222.6 0.5% Thai Baht 1,224.5 0.4% 1,093.0 0.5% $ 101,789.5 33.5% $ 82,116.1 33.7%


30



(ii) Currency risk (continued):



redeemable units would have increased or decreased by approximately $1,017,895 (2015 -

increased or decreased by approximately $887,891). In practice, actual results may differ from this

sensitivity analysis and the difference could be material.


There were no significant concentrations of risk to issuers at December 31, 2016 or 2015. No

exposure to any individual issuer exceeded 5% of the net assets attributable to the holders of

redeemable units either at December 31, 2016 or 2015.



decreased as follows: December 31, 2016 December 31, 2015 5% 5% 5% 5% Indexes Increase Decrease Increase Decrease

DEX 90 Day TBill Index $ 757,907 $ (757,907) $ 609,196 $ (609,196) DEX Universe Bond Index 5,305,352 (5,305,352) 4,264,371 (4,264,371) S&P/TSX Composite Index 5,305,352 (5,305,352) 4,264,371 (4,264,371) MSCI World Index ($Cdn) 3,789,537 (3,789,537) 3,045,979 (3,045,979)

Total $ 15,158,148 $ (15,158,148) $ 12,183,917 $ (12,183,917)


material.








31

2. Fair value of financial instruments (continued):

(a) Fair value hierarchy - financial instruments measured at fair value (continued):

All fair value measurements below are recurring. December 31, 2016 Level 1 Level 2 Level 3 Total

Investments $ 303,162,978 $ - $ - $ 303,162,978


Investments $ 243,678,310 $ - $ - $ 243,678,310

There were no transfers between Levels 1, 2 and 3 during the periods ended December 31, 2016 or

2015.

33

STEADYHAND EQUITY FUND Statements of Comprehensive Income Years ended December 31, 2016 and 2015

Notes 2016 2015

Revenue:

Interest income $ 25,670 $ 11,736 Dividend income 3,846,671 2,510,301 Foreign exchange loss (856,049) (43,844) Change in fair value of investments:

Net realized gain 4,025,504 3,213,206 Net change in unrealized appreciation 11,175,025 4,411,142


Management fees 4 1,090,225 970,232 Withholding taxes 7 122,807 56,059 Transaction costs 8 19,682 32,392 Independent review committee fees 4,103 4,083


(290,122) (258,517) Net operating expenses 946,695 804,249

Increase in net assets attributable to holders of redeemable units

from operations excluding distributions 17,270,126 9,298,292 Distributions to holders of redeemable units:

From net investment income (2,814,572) (1,463,312) From net realized gain on investment - (899,173) Management fee rebates (286,019) (254,434)

(3,100,591) (2,616,919)

Increase in net assets attributable to holders of redeemable units $ 14,169,535 $ 6,681,373


redeemable units: Series A $ 6,901,091 $ 4,175,225 Series O 7,268,444 2,506,148

$ 14,169,535 $ 6,681,373


redeemable units (excluding distributions): Series A $ 8,349,793 $ 5,370,547 Series O 8,920,333 3,927,745

$ 17,270,126 $ 9,298,292


redeemable units (excluding distributions): Series A $ 1.65 $ 1.17 Series O 1.94 1.26


34

STEADYHAND EQUITY FUND Statements of Changes in Net Assets Attributable to Holders of Redeemable Units Years ended December 31, 2016 and 2015



holders of redeemable units 6,901,091 4,175,225 Redeemable unit transactions:






holders of redeemable units 7,268,444 2,506,148 Redeemable unit transactions:

Issue of redeemable units 16,400,000 20,705,000 Reinvestment of distributions 1,651,891 1,421,595 Redemption of redeemable units (16,500,000) -




35

STEADYHAND EQUITY FUND Statements of Cash Flows Years ended December 31, 2016 and 2015

Notes 2016 2015


Proceeds from sale of investments $ 77,391,084 $ 38,146,396 Purchase of investments (86,614,519) (64,034,503) Interest and dividends received 3,910,398 2,374,833 Balances due to broker (2,195,531) 881,073 Management fees paid (788,189) (710,460) Foreign withholding taxes paid (122,807) (56,059)



9,069,918 22,854,558

Increase (decrease) in cash 650,354 (544,162) Cash, beginning of year 196,314 784,317 Effect of exchange rate fluctuations on cash (856,005) (43,841)

Cash (bank indebtedness), end of year $ (9,337) $ 196,314


36

STEADYHAND EQUITY FUND Schedule of Investment Portfolio Year ended December 31, 2016


Canadian Treasury Bill 0.445% 03/23/2017 3,573,000 $ 3,568,586 $ 3,568,586 United States Treasury Bill 0.297% 01/26/2017 122,000 164,374 163,563 Total short-term investments - treasury bills 3,732,960 3,732,149 2.4

Total Short-Term Investments 3,732,960 3,732,149

Equities - Oil and Gas: Pason Systems Inc. 230,000 4,211,368 4,517,200 PrairieSky Royalty Ltd. 210,100 5,860,413 6,710,594 Suncor Energy Inc. 220,900 7,481,135 9,697,510 Total equities – oil and gas 17,552,916 20,925,304 13.4

Equities - Basic Materials: Agrium Inc. 46,000 4,873,889 6,208,160 CCL Industries Inc. 30,800 5,463,644 8,125,040 Ecolab Inc. 43,000 5,248,612 6,759,548 Franco-Nevada Corp. 80,000 4,867,418 6,422,400 Total equities - basic materials 20,453,563 27,515,148 17.7

Equities - Industrial Goods and Services: CAE Inc. 298,000 3,559,445 5,596,440 Canadian National Railway Co. 65,000 3,763,853 5,873,400 Lincoln Electric Holdings Inc. 40,000 1,740,380 4,112,756 Novozymes A/S 140,000 5,253,516 6,485,045 Ritchie Bros. Auctioneers Inc. 123,000 3,411,165 5,602,650 Westshore Terminals Investment Corp. 147,100 3,122,611 3,808,419 Total equities - industrial goods and services 20,850,970 31,478,710 20.1

Equities - Consumer Cyclical: Magna International Inc. 110,000 5,835,723 6,413,000 Starbucks Corp. 72,000 2,751,900 5,360,798 Total equities - consumer cyclical 8,587,623 11,773,798 7.6

Equities - Consumer Products: CVS Health Corp. 68,400 4,877,616 7,238,285 Fomento Economico Mexicano SAB de CV 50,000 5,406,977 5,110,101 Loblaw Cos Ltd. 80,000 4,054,146 5,667,200 Unilever PLC, ADR 80,000 3,058,544 4,366,484 Total equities - consumer products 17,397,283 22,382,070 14.4


CBOE Holdings Inc. 70,000 5,526,942 6,936,353 Experian PLC 210,000 3,901,783 5,477,323 Home Capital Group Inc. 120,000 3,610,348 3,760,800 Toronto-Dominion Bank 103,000 4,542,598 6,820,660 Visa Inc. Cl.A 82,000 5,115,241 8,579,605

Total equities - financial services 22,696,912 31,574,741 20.3 Equities - Healthcare:

Novartis AG 64,100 5,327,817 6,261,458 Total equities - healthcare 5,327,817 6,261,458 4.0

Total equities 112,867,084 151,911,229 97.5

Transaction costs (36,552) - Total Investment Portfolio 116,563,492 155,643,378 99.9

Other Net Assets 195,992 0.1

Total Net Assets $155,839,370 100.0 The accompanying notes are an integral part of these financial statements.

STEADYHAND EQUITY FUND Discussion of Financial Instruments and Risk Management Years ended December 31, 2016 and 2015

37






The Fund’s objective is to grow capital at a pace that significantly exceeds inflation through exposure to a

focused group of Canadian and foreign companies.

The Fund is North American-focused: the portfolio manager invests a majority of the fund in Canadian

stocks, but seeks to enhance returns and minimize risk by also investing in companies and industries that

are not available in Canada.

Financial risks applicable to the Steadyhand Equity Fund are discussed in more detail below.

(a) Credit risk:

As at December 31, 2016 and 2015, the Fund does not have significant exposure to credit risk.

(b) Liquidity risk:


due within twelve months of the year-end of the Fund. The Fund has no derivative liabilities as at


(c) Market risk:


As at December 31, 2016 and 2015, the Fund does not have significant exposure to interest rate

risk.

(ii) Currency risk:




United States dollar $ 55,097.9 35.3% $ 54,581.1 42.1% Danish Krone 6,504.7 4.2% - - British Pound 5,477.3 3.5% 4,426.0 3.4% $ 67,079.9 43.0% $ 59,007.1 45.5%



redeemable units would have increased or decreased by approximately $670,799 (2015 -

increased or decreased by approximately $590,071). In practice, actual results may differ from this

sensitivity analysis and the difference could be material.


38








Suncor Energy Inc. 6.2% Visa Inc. 5.5% CCL Industries Inc. 5.2%


CVS Health Corp. 6.3% Suncor Energy Inc. 5.6% Toronto Dominion Bank 5.5% Visa Inc. 5.4%




S&P/TSX Composite Index $ 4,557,337 $ (4,557,337) $ 3,772,642 $ (3,772,642) MSCI World Index ($Cdn) 3,038,225 (3,038,225) 2,515,095 (2,515,095) Total $ 7,595,562 $ (7,595,562) $ 6,287,737 $ (6,287,737)


material.


39









Investments $ 151,911,229 $ 3,732,149 $ - $ 155,643,378


Investments $ 119,761,936 $ 11,477,204 $ - $ 131,239,140


2015.

41

STEADYHAND GLOBAL EQUITY FUND Statements of Comprehensive Income Years ended December 31, 2016 and 2015

Notes 2016 2015

Revenue:

Interest income (expense) $ (206) $ 244 Dividend income 3,533,608 2,519,171 Foreign exchange loss (132,530) (186,551) Changes in fair value of investments:

Net realized gain 6,042,811 10,435,558 Net change in unrealized appreciation (depreciation) (1,774,652) 1,691,574


Management fees 4 1,064,260 1,083,203 Withholding taxes 7 355,224 276,594 Transaction costs 8 100,335 125,520 Independent review committee fees 4,103 4,083


(324,110) (328,699)

Net operating expenses 1,199,812 1,160,701


redeemable units from operations excluding distributions 6,469,219 13,299,295 Distributions to holders of redeemable units:

From net investment income (2,608,819) (1,396,767) From net realized gain on investment (4,949,055) (8,198,886) Management fee reductions (320,007) (324,616)

(7,877,881) (9,920,269)

Increase (decrease) in net assets attributable to holders of redeemable units $ (1,408,662) $ 3,379,026

Increase (decrease) in net assets attributable to

holders of redeemable units: Series A $ (1,380,433) $ 1,952,755 Series O (28,229) 1,426,271

$ (1,408,662) $ 3,379,026


redeemable units (excluding distributions): Series A $ 2,093,820 $ 7,073,502 Series O 4,375,399 6,225,793

$ 6,469,219 $ 13,299,295


redeemable units per unit (excluding distributions): Series A $ 0.33 $ 1.22 Series O 0.66 1.38


42

STEADYHAND GLOBAL EQUITY FUND Statements of Changes in Net Assets Attributable to Holders of Redeemable Units Years ended December 31, 2016 and 2015



holders of redeemable units (1,380,433) 1,952,755 Redeemable unit transactions:






holders of redeemable units (28,229) 1,426,271 Redeemable unit transactions:

Issue of redeemable units 15,750,000 10,670,000 Reinvestment of distributions 4,403,630 4,799,521 Redemption of redeemable units (5,000,000) -




43

STEADYHAND GLOBAL EQUITY FUND Statements of Cash Flows Years ended December 31, 2016 and 2015

Notes 2016 2015


Proceeds from sale of investments $ 25,523,806 $ 34,245,595 Purchase of investments (45,999,103) (46,594,887) Realized gain on forwards 1,067,950 - Interest and dividends received 3,528,028 2,524,106 Management fees paid (742,183) (749,791) Foreign withholding taxes paid (355,224) (276,594)


Proceeds from issue of redeemable units 22,100,485 17,493,445 Payments on redemption of redeemable units (10,488,851) (2,692,033) Cash distributions paid to holders of redeemable units (188,874) (397,489) 11,422,760 14,403,923

Increase (decrease) in cash (5,553,966) 3,552,352 Cash, beginning of year 8,414,449 5,048,505 Effect of exchange rate fluctuations on cash (132,395) (186,408)

Cash, end of year $ 2,728,088 $ 8,414,449


44

STEADYHAND GLOBAL EQUITY FUND Schedule of Investment Portfolio Year ended December 31, 2016

Number of Percentage shares or Average Fair of net par value cost value assets % Equities - Oil and Gas:

Apache Corp. 42,463 $ 2,451,916 $ 3,614,321 BP PLC 516,661 4,208,196 4,362,942 Royal Dutch Shell PLC 132,747 4,889,967 4,908,511 Total equities - oil and gas 11,550,079 12,885,774 9.4


East Japan Railway Co. 22,400 1,871,609 2,601,285 Mitsubishi Corp. 106,700 2,379,271 3,054,797 PostNL NV 530,142 2,148,636 3,068,505

Total equities - industrial goods and services 6,399,516 8,724,587 6.4 Equities - Consumer Cyclical:

Galaxy Entertainment Group Ltd. 740,000 4,037,110 4,326,310 Harman International Industries Inc. 21,406 2,501,722 3,191,035 Johnson Controls Inc. 41,779 2,283,946 2,307,796 Panasonic Corp. 291,500 2,999,288 3,986,774 Takashimaya Co. Ltd. 265,000 2,477,765 2,937,254 Toyota Motor Corp. 31,100 1,655,396 2,459,468 Whirlpool Corp. 14,010 3,249,294 3,415,135 Total equities - consumer cyclical 19,204,521 22,623,772 16.5


Japan Tobacco Inc. 56,400 1,695,087 2,492,764 Tesco PLC 810,251 2,750,533 2,777,278 Total equities - consumer products 4,445,620 5,270,042 3.8


Bangkok Bank PLC 395,900 2,550,638 2,364,740 Bank Mandiri Persero Tbk PT 2,796,900 2,230,495 3,222,532 BNP Paribas SA 44,038 3,042,772 3,771,731 CK Hutchinson Holdings Ltd. 195,460 2,625,889 2,971,776 Commerzbank AG 308,126 4,290,768 3,158,099 DBS Group Holdings Ltd. 214,400 2,897,761 3,451,003 HSBC Holdings PLC 312,674 3,189,359 3,403,575 Nomura Holdings Inc. 491,000 3,290,982 3,890,293 Royal Bank of Scotland Group PLC 774,776 3,320,666 2,883,568 Sumitomo Mitsui Financial Group 64,300 2,431,962 3,297,345 Sumitomo Mitsui Trust Holdings 70,100 3,438,396 3,371,510 Swire Pacific Ltd., Class A 229,808 2,914,098 2,943,469 Synchrony Financial 74,518 2,921,775 3,624,568 Total equities - financial services 39,145,561 42,354,209 30.8

Equities - Healthcare:

AstraZeneca PLC 51,589 3,599,959 3,793,497 Bayer AG 22,928 4,075,834 3,214,921 Celgene Corp. 23,050 3,456,403 3,577,993 Novartis AG 47,638 4,586,606 4,657,759 PerkinElmer Inc. 33,563 2,156,587 2,347,268 Roche Holding AG 12,211 4,030,464 3,747,712 Sanofi S.A. 31,301 3,225,624 3,404,737 Total equities - healthcare 25,131,477 24,743,887 18.1

45

STEADYHAND GLOBAL EQUITY FUND Schedule of Investment Portfolio (continued) Year ended December 31, 2016

Number of Percentage shares or Average Fair of net par value cost value assets %

Equities (continued): Equities - Technology:

Alphabet Inc., Class A 1,181 1 1,222,400 Alphabet Inc., Class C 1,149 725,294 1,221,067 SK Hynix Inc. 75,220 2,904,053 3,733,304 UBISOFT Entertainment SA 64,211 2,394,385 3,069,907 Total equities - technology 6,023,733 9,246,678 6.8

Equities - Communications and Media:

Nippon Telegraph & Telephone Corp. 55,300 2,294,942 3,123,215 Nokia Corp. 419,933 3,910,798 2,725,225 Telefonica SA 198,108 2,766,488 2,471,551 Total equities - communications and media 8,972,228 8,319,991 6.1

Total Equities 120,872,735 134,168,940 97.9 Transaction Costs (215,439)

Total Investment Portfolio 120,657,296 134,168,940 97.9 Other Net Assets 2,808,836 2.1 Total Net Assets $ 136,977,776 100.0


STEADYHAND GLOBAL EQUITY FUND Discussion of Financial Instruments and Risk Management Years ended December 31, 2016 and 2015

46






The Fund’s objective is to grow capital at a pace that significantly exceeds inflation through exposure to a

collection of leading businesses throughout the world.

The Fund invests in equities around the globe. Concentration is focused in the developed world - western

Europe, the United States, and Japan in particular. The Fund's geographic allocation may vary considerably

based on where the best opportunities lie.

Financial risks applicable to the Steadyhand Global Equity Fund are discussed in more detail below.

(a) Credit risk:

As at December 31, 2016 and 2015, the Fund had no significant exposure to credit risk.

(b) Liquidity risk:


due within twelve months of the year-end of the Fund. The Fund had no derivative liabilities as at


(c) Market risk:


As at December 31, 2016 and 2015, the Fund had no significant exposure to interest or credit rate

risk.

(ii) Currency risk:



were as follows:

December 31, 2016 December 31, 2015 Thousands % of net Thousands % of net Currency of CAD assets of CAD assets

Japanese Yen $ 31,250.0 22.8% $ 30,337.6 25.5% Euro 27,142.0 19.8% 17,080.0 14.4% United States Dollar 24,535.6 17.9% 19,785.3 16.6% British Pound 19,914.9 14.5% 17,131.7 14.4% Hong Kong Dollar 10,241.6 7.5% 9,438.8 7.9% Swiss Franc 8,448.8 6.2% 7,157.3 6.0% Korean Won 3,733.3 2.7% 2,416.0 2.0% Singapore Dollar 3,451.0 2.5% 2,439.9 2.1% Indonesian Rupiah 3,222.5 2.4% 2,607.0 2.2% Thai Baht 2,364.7 1.7% 2,330.6 2.0%

$ 134,304.4 98.0% $ 110,724.2 93.1%

STEADYHAND GLOBAL EQUITY FUND Discussion of Financial Instruments and Risk Management Years ended December 31, 2016 and 2015

47



(ii) Currency risk (continued):



redeemable units would have increased or decreased by approximately $1,343,044 (2015 -

increased or decreased by approximately $1,108,142). In practice, actual results may differ from

this sensitivity analysis and the difference could be material.

There were no significant concentrations of risk to issuers at December 31, 2016 or 2015. No

exposure to any individual issuer exceeded 5% of the net assets attributable to the holders of

redeemable units either at December 31, 2016 or 2015.




MSCI World Index ($Cdn) $ 6,708,447 $ (6,708,447) $ 5,529,695 $ (5,529,695)


material.





in the fair value hierarchy into which the fair value measurement is categorized. The amounts are

based on the values recognized in the statement of financial position.



Investments $ 134,168,940 $ - $ - $ 134,168,940


Investments $ 110,593,904 $ - $ - $ 110,593,904

There were no transfers between Levels 1, 2, and 3 during the periods ended December 31, 2016 or

2015.

49

STEADYHAND SMALL-CAP EQUITY FUND Statements of Comprehensive Income Years ended December 31, 2016 and 2015

Notes 2016 2015 Revenue:

Interest income $ 47,638 $ 17,414 Dividend income 1,701,040 1,305,146 Foreign exchange loss 55,745 54 Change in fair value of investments:

Net realized gain (loss) 4,044,633 (5,564,533) Net change in unrealized appreciation (depreciation) 4,826,454 (3,193,928)

Total revenue (loss) 10,675,510 (7,435,847) Expenses:

Management fees 4 781,520 794,405 Transaction costs 8 254,014 75,815 Independent review committee fees 4,103 4,083 Total operating expenses 1,039,637 874,303

Management fee reductions (211,640) (207,933) Expenses waived or absorbed by Manager (4,103) (4,083)

(215,743) (212,016)

Net operating expenses 823,894 662,287

Increase (decrease) in net assets attributable to holders of redeemable units from operations excluding distributions 9,851,616 (8,098,134)

Distributions to holders of redeemable units: From net investment income (971,620) (35,117) Management fee rebates (211,640) (207,933)

(1,183,260) (243,050)

Increase (decrease) in net assets attributable to holders of redeemable units $ 8,668,356 $ (8,341,184)

Increase (decrease) in net assets attributable to holders of redeemable units:

Series A $ 5,732,437 $ (6,531,598) Series O 2,935,919 (1,809,586)

$ 8,668,356 $ (8,341,184)

Increase (decrease) in net assets attributable to holders of redeemable units (excluding distributions):

Series A $ 6,404,707 $ (6,323,665) Series O 3,446,909 (1,774,469)

$ 9,851,616 $ (8,098,134)

Increase (decrease) in net assets attributable to holders of redeemable units per unit (excluding distributions):

Series A $ 1.96 $ (1.96) Series O 2.39 (1.74)


50

STEADYHAND SMALL-CAP EQUITY FUND Statements of Changes in Net Assets Attributable to Holders of Redeemable Units Years ended December 31, 2016 and 2015




Issue of redeemable units 5,842,223 4,983,853 Reinvestments of distributions 658,298 207,716 Redemption of redeemable units (5,175,120) (6,502,788)

Net increase (decrease) from redeemable unit transactions 1,325,401 (1,311,219)





Issue of redeemable units 5,350,000 7,630,000 Reinvestments of distributions 510,990 35,116 Redemption of redeemable units (2,000,000) -




51

STEADYHAND SMALL-CAP EQUITY FUND Statements of Cash Flows Years ended December 31, 2016 and 2015

Notes 2016 2015


Proceeds from sale of investments $ 52,654,778 $ 10,435,014 Purchase of investments (62,477,408) (17,405,319) Interest and dividends received 1,755,585 1,294,588 Balances due from brokers 2,358,242 (141,738) Management fees paid (562,096) (602,539)


Proceeds from redeemable units issued 11,139,993 12,767,584 Redemption of redeemable units (7,006,613) (6,487,832) Cash distributions paid to holders of redeemable units (13,972) (218)

4,119,408 6,279,534

Decrease in cash (2,151,491) (140,460) Cash, beginning of year 7,127,527 7,267,879 Effect of exchange rate fluctuations on cash 76,722 108

Cash, end of year $ 5,052,758 $ 7,127,527


52

STEADYHAND SMALL-CAP EQUITY FUND Schedule of Investment Portfolio (unaudited) Year ended December 31, 2016

Number of Percentage shares or Average Fair of net par value cost value assets %

Equities - Oil and Gas:

Ensign Energy Services Inc. 158,700 $ 1,126,167 $ 1,488,606 MEG Energy Corp. 111,600 679,025 1,030,068 Total equities - oil and gas 1,805,192 2,518,674 3.5


AG Growth International Inc. 45,555 1,978,428 2,392,549 Badger Daylighting Ltd. 31,876 413,248 1,023,220 Cargojet Inc. 62,777 2,493,994 2,871,420 CBIZ Inc. 124,809 1,255,513 2,293,052 Echo Global Logistics 137,000 4,446,486 4,602,309 Exchange Income Corp. 59,332 2,057,448 2,477,111 Macdonald Dettwiler & Associates Ltd. 57,695 3,801,357 3,859,219 New Flyer Industries Inc. 42,722 1,726,164 1,744,766 Stantec Inc. 137,300 2,849,419 4,657,215 Total equities - industrial goods and services 21,022,057 25,920,861 36.1

Equities - Consumer Cyclical:

DHX Media Ltd. 467,572 3,531,356 3,296,383 Martinrea International Inc. 363,050 3,075,591 3,118,600 Spin Master Corp. 83,800 2,706,894 2,697,522 Total equities - consumer cyclical 9,313,841 9,112,505 12.7


Brick Brewing Co. 456,900 1,338,872 1,375,269 Liquor Stores N.A. Ltd. 331,595 3,405,699 3,491,695 Total equities – consumer products 4,744,571 4,866,964 6.8


Diversified Royalty Corp. 1,327,600 3,318,335 3,411,932 Gluskin Sheff + Associates Inc. 177,899 3,126,582 3,102,559 Total equities – financial services 6,444,917 6,514,491 9.1

Equities - Technology:

DH Corp. 118,095 3,392,787 2,631,157 Enghouse Systems Ltd. 71,273 3,761,648 3,987,012 Points International Ltd. 328,506 3,702,900 3,373,756 Pure Technologies 821,200 4,251,961 3,941,760 Total equities - technology 15,109,296 13,933,685 19.4

Equities - Real Estate:

Dream Global REIT 355,000 3,157,662 3,354,750 Total equities – real estate 3,157,662 3,354,750 4.7

Equities - Utilities:

Northland Power Inc. 125,000 2,720,328 2,912,500 Total equities - utilities 2,720,328 2,912,500 4.1

Total Equities 64,317,864 69,134,430 96.4 Transaction Costs (148,997) - Total Investment Portfolio 64,168,867 69,134,430 96.4 Other Net Assets 2,559,879 3.6 Total Net Assets $ 71,694,309 100.0


STEADYHAND SMALL-CAP EQUITY FUND Discussion of Financial Instruments and Risk Management Years ended December 31, 2016 and 2015

53






The Fund’s objective is to grow capital at a pace that significantly exceeds inflation and provide exposure to

a collection of smaller companies that think big. This Fund will move in a cycle of its own and will often be

out of synch with the overall market.

The Fund looks to the Canadian and U.S. equity markets for small and mid-sized companies and although it

typically invests the majority of its assets in Canadian equities, the portfolio manager may invest a significant

portion of the fund's assets in U.S. equities in pursuit of opportunities not available in the Canadian market.

However, it is not expected that the Fund's U.S. holdings will exceed 40% of its net assets for any prolonged

period of time.

Financial risks applicable to the Steadyhand Small-Cap Equity Fund are discussed in more detail below.

(a) Credit risk:

At December 31, 2016 and 2015, the Fund had no significant exposure to credit risk.

(b) Liquidity risk:


due within twelve months of the year-end of the Fund. The Fund had no derivative liabilities as at


(c) Market risk:


As at December 31, 2016 and 2015, the Fund had no significant exposure to interest rate risk.

(ii) Currency risk:




United States Dollar $ 7,367.9 10.3% $ 8,993.4 15.4%



redeemable units would have increased or decreased by approximately $73,679 (2015 - increased

or decreased by approximately $89,934). In practice, actual results may differ from this sensitivity

analysis and the difference could be material.


54






of redeemable units: At December 31, 2016: Stantec Inc. 6.5% Echo Global Logistics Ltd. 6.4% Enghouse Systems Ltd. 5.6% Pure Technologies Ltd. 5.5% Macdonald Dettwiler & Associates Ltd. 5.4% At December 31, 2015: CBIZ Inc. 9.9% Stantec Inc. 7.9% Medical Facilities Corp. 7.4% DirectCash Payments Inc. 6.8% ZCL Composites Inc. 6.6% Pure Technologies Ltd. 6.5% Macdonald Dettwiler & Associates Ltd. 5.9% Avigilon Corp. 5.8% Total Energy Services Inc. 5.6% Hibbett Sports Inc. 5.5%



decreased as follows:

December 31, 2016 December 31, 2015 5% 5% 5% 5% Index Increase Decrease Increase Decrease Nesbitt Burns SmallCap

Index (Wtd.) $ - $ - $ 2,891,978 $ (2,891,978) TSX Small-Cap Index 2,938,213 (2,938,213) - - Russell 2000 Index 518,508 (518,508) - - $ 3,456,721 $ (3,456,721) $ 2,891,978 $ (2,891,978)


material.


55









Investments $ 69,134,430 $ - $ - $ 69,134,430


Investments $ 50,715,704 $ - $ - $ 50,715,704


2015.

STEADYHAND INVESTMENT FUNDS Notes to Financial Statements Years ended December 31, 2016 and 2015

56

1. Reporting entity: .......................................................................................................................................... 57

2. Basis of preparation: ................................................................................................................................... 57

3. Significant accounting policies:.................................................................................................................. 58

4. Related party transactions: ......................................................................................................................... 61

5. Redeemable units: ....................................................................................................................................... 62

6. Net gain (loss) from financial instruments at fair value through profit or loss: ..................................... 64

7. Withholding tax and other income taxes: ................................................................................................. 64

8. Transaction costs and soft dollars: ............................................................................................................ 65

9. Capital management: .................................................................................................................................. 65

10. Financial risk management: ........................................................................................................................ 65

11. Fair value of financial instruments: ............................................................................................................ 68

12. Involvement with unconsolidated structured entities: ............................................................................ 69


57

1. Reporting entity:

The Steadyhand Investment Funds include the following:

Name of the Fund Date of inception

Steadyhand Savings Fund January 22, 2007 Steadyhand Income Fund January 22, 2007 Steadyhand Founders Fund January 2, 2012 Steadyhand Equity Fund January 22, 2007 Steadyhand Global Equity Fund January 22, 2007 Steadyhand Small-Cap Equity Fund January 22, 2007

Each of the Steadyhand Investment Funds (the “Funds”) is an open-end unit trust created under the laws of

the Province of British Columbia pursuant to a Declaration of Trust dated January 2, 2007, as amended, by

RBC Investor Services Trust (the “Trustee”), who acts as Trustee and Steadyhand Investment Management

Ltd. (the “Manager”), who acts as Manager of the Funds. The Manager is registered as an investment fund

manager with the British Columbia Securities Commission. The administration of the Funds is delegated to

RBC Investor Services (the “Administrator”).

The Funds are unit trusts domiciled in Canada. The address of the Funds’ registered office is at 1747 West

3rd Avenue, Vancouver, British Columbia, V6J 1K7.

2. Basis of preparation:

(a) Statement of compliance:

The financial statements of the Funds have been prepared in compliance with International Financial

Reporting Standards (“IFRS”). The financial statements were authorized for issue by the Manager on

February 21, 2017.

(b) Basis of measurement:

The financial statements have been prepared on a historical cost basis except for investments and

derivatives, which are measured at fair value, and redeemable units, which are measured at redemption

value. Redemption value approximates fair value.

(c) Functional and presentation currency:

These financial statements are presented in Canadian dollars, which are the Funds’ functional currency.

(d) Use of estimates and judgment:

The preparation of financial statements in conformity with IFRS requires the Manager to make

judgments, estimates and assumptions that affect the application of accounting policies and the

reported amounts of assets, liabilities, income and expenses. Actual results may differ from these

estimates.


58

2. Basis of preparation (continued):

(d) Use of estimates and judgment (continued):

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are

recognized in the period in which the estimates are revised and in any future period affected.

3. Significant accounting policies:

The accounting policies set out below have been applied consistently to all periods presented in these

financial statements.

(a) Financial instruments:

(i) Recognition and measurement:

Financial instruments are required to be classified into one of the following categories: held-for-

trading, fair value through profit or loss (“FVTPL”), available-for-sale, loans and receivables, assets

held-to-maturity, and other financial liabilities. All financial instruments are measured at fair value

on initial recognition. Measurement in subsequent periods depends on the classification of the

financial instrument. Transaction costs are included in the initial carrying amount of financial

instruments except for financial instruments classified as held-for-trading or fair value through profit

or loss in which case transaction costs are expensed as incurred.

Financial assets and financial liabilities held for trading or at fair value through profit or loss are

recognized initially on the trade date, which is the date on which the Funds become a party to the

contractual provisions of the instrument. Other financial assets and financial liabilities are

recognized on the date on which they are originated. The Funds derecognize a financial liability

when its contractual obligations are discharged, cancelled or expire.

Financial assets and liabilities are offset and the net amount presented in the statement of net

assets only when the Funds have a legal right to offset the amounts and intends either to settle on

a net basis or to realize the asset and settle the liability simultaneously.

The Funds have not classified any of its financial instruments as available-for-sale or assets held to

maturity.

The fair value of financial assets and liabilities that are not traded in an active market, including

derivative instruments, is determined using valuation techniques. Valuation techniques also include

the use of comparable recent arm’s length transactions, reference to other instruments that are

substantially the same, discounted cash flow analysis, and others commonly used by market

participants and which make the maximum use of observable inputs. Should the value of the

financial asset or liability, in the opinion of the Manager, be inaccurate, unreliable or not readily

available, the fair value is estimated on the basis of the most recently reported information of a

similar financial asset or liability.


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3. Significant accounting policies (continued):

(a) Financial instruments (continued):

(ii) Held-for-trading and fair value through profit and loss:

Financial instruments classified as held-for-trading or FVTPL are subsequently measured at fair

value at each reporting period with changes in fair value recognized in the statement of

comprehensive income in the period in which they occur. The Funds’ derivative financial assets

and derivative financial liabilities are classified as held-for-trading. The Funds’ investments in

securities are designated as FVTPL.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an

orderly transaction between market participants at the measurement date. The fair value of

financial assets and liabilities traded in active markets (such as publicly traded derivatives and

marketable securities) are based on quoted market prices at the close of trading on the reporting

date. The Funds use the last traded market price for both financial assets and financial liabilities

where the last traded price falls within that day’s bid-ask spread. In circumstances where the last

traded price is not within the bid-ask spread, the Manager determines the point within the bid-ask

spread that is most representative of fair value based on the specific facts and circumstances. The

Funds’ policy is to recognize transfers into and out of the fair value hierarchy levels as of the date

of the event or change in circumstances giving rise to the transfer.

(iii) Loans and receivables:

Loans and receivables are financial assets with fixed or determinable payments that are not quoted

in an active market. Such assets are recognized initially at fair value plus any directly attributable

transaction costs. Subsequent measurement of loans and receivables is at amortized cost using

the effective interest method, less any impairment losses. Interest income is recognized by

applying the effective interest rate. The Funds classify cash, subscriptions receivable, balances due

from brokers, and interest and dividends receivable, as loans and receivables.

The effective interest method is a method of calculating the amortized cost of a financial asset or

liability and of allocating interest income or expense over the relevant period. The effective interest

rate is the rate that discounts estimated future cash payments through the expected life of the

financial asset or liability, or where appropriate, a shorter period.

(iv) Other financial liabilities:

Other financial liabilities are initially measured at fair value, net of transaction costs, and are

subsequently measured at amortized cost using the effective interest method. The Fund’s other

financial liabilities are comprised of redemptions payable, balances due to brokers, management

fees payable, due to manager, and distributions payable.


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(b) Redeemable units:

The Funds classify financial instruments issued as financial liabilities or equity instruments in

accordance with the substance of the contractual terms of the instruments. The redeemable units,

which are classified as financial liabilities and measured at redemption amount, provide investors with

the right to require redemption, subject to available liquidity, for cash at a unit price based on the Funds’

valuation policies at each redemption date. Distributions to holders of redeemable units are recognized

in comprehensive income when they are authorized and no longer at the discretion of the Manager.

(c) Increase (decrease) in net assets attributable to holders of redeemable units per unit:

The increase (decrease) in net assets attributable to holders of redeemable units per unit is calculated

by dividing the increase (decrease) in net assets attributable to holders of redeemable units by the

weighted average number of units outstanding during the year.

(d) Foreign exchange:

The financial statements of the Funds are denominated in Canadian dollars. Foreign denominated

investments and other foreign denominated assets and liabilities are translated into Canadian dollars

using the exchange rates prevailing on each valuation date. Purchases and sales of investments, as

well as income and expense transactions denominated in foreign currencies, are translated using

exchange rates prevailing on the date of the transaction. Foreign currency gains and losses are

recognized in the statement of comprehensive income.

(e) Income recognition:

Interest income is recognized on an accrual basis using the effective interest method. Dividend income

is recognized on the date that the right to receive payment is established, which for quoted equity

securities is usually the ex-dividend date. Portfolio transactions are recorded on the trade date.

Realized gains and losses arising from the sale of investments are determined on the average cost

basis of the respective investments. Income and capital gains distributions from pooled funds are

recorded at the distribution date and maintain the same classification.

(f) Income taxes:

The Funds qualify as unit trusts under the Income Tax Act (Canada). All of the Funds’ net income for

tax purposes and net capital gains realized in any period are required to be distributed to unitholders

such that no income tax is payable by the Funds. As a result, the Funds do not record income taxes.


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(g) New standards and interpretations not yet adopted:

A number of new standards, amendments to standards and interpretations are not yet effective for the

periods ended December 31, 2016 and 2015, and have not been applied in preparing these financial

statements. None of these will have a significant effect on the financial statement of the Funds, with the

possible exception of IFRS 9, Financial Instruments.

The IFRS 9 deals with recognition, derecognition, classification and measurement of financial statements

and its requirements and represent a significant change from the existing requirements in IAS 39,

Financial Instruments: Recognition and Measurement, in respect of financial assets. The standard

contains two primary measurement categories for financial assets: amortized cost and fair value. A

financial asset would be measured at amortized cost if it is held within a business model whose objective

is to hold assets in order to collect contractual cash flows, and the asset’s contractual terms give rise on

specified dates to cash flows that are solely payments of principal and interest on the principal

outstanding. All other financial assets would be measured at fair value. The standard eliminates the

existing IAS 39 categories of held-to-maturity, available-for-sale and loans and receivables.

The standard is effective for fiscal years beginning January 1, 2018, but early adoption is permitted. The

Funds’ Manager is currently in the process of evaluating the potential effect of this standard. The

standard is not expected to have a significant impact on the financial statements since the Funds’

financial assets are currently measured at fair value or amortized cost.

4. Related party transactions:

Management fees:

Under the investment management agreement, the Manager receives a management fee based on the net

asset value attributable to holders of Series A redeemable units on each valuation day at the following

annualized rates: Management Fund name fee

Steadyhand Savings Fund 0.65% Steadyhand Income Fund 1.04% Steadyhand Founders Fund 1.34% Steadyhand Equity Fund 1.42% Steadyhand Global Equity Fund 1.78% Steadyhand Small-Cap Equity Fund 1.78%

Management fees for Series O redeemable units are paid outside the funds directly to the Manager.

Management fee reductions are offered to all investors in the Funds based on the size of the account and

tenure as an investor in the Funds. The fee reductions are paid in the form of special distributions at the

Manager’s discretion and the fee rebate program may be revised or cancelled at any time.


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4. Related party transactions (continued):

Operating expenses:

The Manager is responsible for paying all of the Funds’ operating expenses, including Independent Review

Committee (“IRC”) fees. Such IRC fees have been absorbed by the Manager as reflected in each Fund’s

statement of comprehensive income.

The Manager may absorb all or a portion of the Funds’ obligations, where the aggregate expenses exceed a

certain percentage of the average daily net asset value of each Fund. This absorption of expenses may be

terminated at any time by the Manager.

Unit holdings:

Directors, officers and affiliates of the Manager own Series A redeemable units of the Funds. As at

December 31, 2016 and 2015, the following Series A redeemable units were held by directors, officers and

other affiliates of the Manager: December 31, December 31, Fund name 2016 2015

Steadyhand Savings Fund 153,497 251,730 Steadyhand Income Fund 249,247 244,352 Steadyhand Founders Fund 250,506 144,672 Steadyhand Equity Fund 249,736 248,114 Steadyhand Global Equity Fund 319,421 317,322 Steadyhand Small-Cap Equity Fund 103,113 102,226

No Series O redeemable units (2015 - no Series O redeemable units) were held directors, officers and other

affiliates of the Manager.

The Founders Fund holds Series O redeemable units in all five of the other Steadyhand Funds. Refer to the

Founders Fund for a description of its holdings in other Steadyhand Funds.

5. Redeemable units:

The Funds are authorized to issue an unlimited number of redeemable units in an unlimited number of

distinct series. The Funds, except the Steadyhand Founders Fund, currently offer two series of units,

Series A and Series O. The Steadyhand Founders Fund offers only Series A redeemable units.

Series A redeemable units are available to all investors who invest the minimum amount as specified by the

Manager.

Series O redeemable units are only available to large private or institutional investors.


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5. Redeemable units (continued):

The redeemable unit transactions for the Funds during the years ended December 31, 2016 and 2015 are

as follows:

2016

Outstanding Redeemable Outstanding redeemable Redeemable units issued Redeemable redeemable units, beginning units on reinvestment units units of period issued of distributors redeemed end of period Steadyhand Savings Fund:

Series A 1,959,106 1,671,574 11,325 (1,723,121) 1,918,884 Series O 2,972,917 4,240,000 25,124 (2,540,000) 4,698,041

Steadyhand Income Fund: Series A 8,507,316 896,492 385,612 (991,797) 8,797,623 Series O 7,292,039 553,073 355,497 - 8,200,609

Steadyhand Founders Fund: Series A 19,863,499 4,750,059 634,860 (1,497,347) 23,751,071

Steadyhand Equity Fund: Series A 4,699,218 1,096,748 88,011 (484,595) 5,399,382 Series O 4,029,329 1,141,747 101,069 (1,055,420) 4,216,725

Steadyhand Global Equity Fund: Series A 6,373,694 700,937 338,423 (599,387) 6,813,667 Series O 5,501,023 1,674,504 439,168 (500,914) 7,113,781

Steadyhand Small-Cap Equity Fund: Series A 3,204,714 437,715 46,514 (382,577) 3,306,366 Series O 1,307,947 397,887 34,192 (142,293) 1,597,733

2015

Outstanding Redeemable Outstanding redeemable Redeemable units issued Redeemable redeemable units, beginning units on reinvestment units units of period issued of distributors redeemed end of period Steadyhand Savings Fund:

Series A 1,551,221 1,850,499 12,945 (1,455,559) 1,959,106 Series O 2,650,221 1,594,000 28,696 (1,300,000) 2,972,917

Steadyhand Income Fund: Series A 8,462,514 1,032,607 404,328 (1,392,133) 8,507,316 Series O 6,282,427 662,319 347,293 - 7,292,039

Steadyhand Founders Fund: Series A 15,174,225 5,446,924 586,679 (1,344,329) 19,863,499

Steadyhand Equity Fund: Series A 4,464,438 580,789 77,564 (423,573) 4,699,218 Series O 2,558,682 1,375,978 94,669 - 4,029,329

Steadyhand Global Equity Fund: Series A 5,527,850 622,235 478,640 (255,031) 6,373,694 Series O 4,010,525 1,012,458 478,040 - 5,501,023

Steadyhand Small-Cap Equity Fund: Series A 3,299,818 354,770 15,081 (464,955) 3,204,714 Series O 754,611 550,615 2,721 - 1,307,947


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6. Net gain (loss) from financial instruments at fair value through profit or loss:

The Steadyhand Income Fund is the only Steadyhand Fund that holds derivative instruments classified as

held-for-trading. Net gain (loss) from the Steadyhand Income Fund’s investments and derivatives as

reflected in the Fund’s statement of comprehensive income is set out below.

December 31, December 31, 2016 2015

Net loss from financial instruments held for trading:

Derivative financial instruments $ (48,634) $ (237,518) Net gain (loss) from financial assets designated as at fair

value through profit or loss: Investments 6,055,102 (2,616,119)

$ 6,006,468 $ (2,853,637)

Net gain (loss) from financial instruments at fair

value through profit or loss: Realized $ 2,875,293 $ 4,102,621 Unrealized 3,131,175 (6,956,258)

$ 6,006,468 $ (2,853,637)

7. Withholding tax and other income taxes:

Certain dividend and interest income received by the Funds are subject to withholding tax imposed in the

country of origin. During the period, the average withholding tax rate for the Funds with foreign taxes

withheld were:

December 31, December 31, Fund name 2016 2015

Steadyhand Equity Fund 15.3% 13.4% Steadyhand Global Equity Fund 12.8% 12.9%

As at December 31, 2016 and 2015, the Funds had no capital or non-capital losses available for utilization

against net realized capital gains or non-capital gains in future years.


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8. Transaction costs and soft dollars:

The Manager may select brokers who charge commission in “soft dollars” if they determine in good faith that

the commission is reasonable in relation to the order execution and research services utilized. Brokerage

commissions and transaction costs on portfolio transactions for the years ended December 31, 2016 and

2015 include the following:


Steadyhand Income Fund $ 48,692 $ 67,986 Steadyhand Equity Fund 19,682 32,392 Steadyhand Global Equity Fund 100,335 125,520 Steadyhand Small-Cap Equity Fund 254,014 75,815

Included in the above transaction costs are soft dollar commissions as follows:


Steadyhand Income Fund $ 3,603 $ 6,413 Steadyhand Global Equity Fund 5,800 9,268

Soft dollars represent a means of paying for products or services provided by brokerage firms (e.g.,

research reports) in exchange for directing transactions (e.g., trade execution) to the brokerage. Mutual fund

managers may use soft dollars allocated by brokerages to pay for a portion of the total commissions owed to

the brokerage.

9. Capital management:

The redeemable units issued by the Funds represent the capital of the Funds. The Funds are not subject to

any internally or externally imposed restrictions on its capital. The Funds’ objectives in managing the

redeemable units are to ensure a stable base to maximize returns to all investors, and to manage liquidity

risk arising from redemptions.


The following is a general discussion of the financial risks to which the Funds are exposed. Refer to the

Discussion of Financial Instruments and Risk Management following each Fund’s financial statements for

information specific to the respective Fund.

(a) Risk management framework:

The Funds’ investment portfolio comprises of listed equity and debt securities, derivative financial

forward contracts and derivative foreign currency futures contract, and investments in unlisted

investment funds.


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(a) Risk management framework (continued):

The Manager has been given discretionary authority to manage the assets in line with the Fund’s

investment objectives. Compliance with the target asset allocations and the composition of the portfolio

are monitored by the Manager on a quarterly basis. In instances where the portfolio has diverged from

target asset allocations, the Manager is obliged to take actions to rebalance the portfolio in line with the

established targets, within prescribed time limits.

(b) Credit risk:

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or

commitment that it has entered into with the Funds, resulting in a financial loss to the Funds. It arises

principally from debt securities held, and also from derivative assets, cash, and other receivables due to

the Funds. The carrying value of these financial instruments as recorded in the statements of financial

position reflects the Funds’ maximum exposure to credit risk.

The Funds limits their exposure to credit loss by placing their cash and fixed income securities in

instruments with high credit quality. To maximize the credit quality of its investments, the Funds’

managers perform ongoing credit evaluations based upon factors surrounding the credit risk of

customers, counterparties, historical trends and other information.

The Funds invest in financial assets, which have an investment grade as rated primarily by

Dominion Bond Rating Services, Standard & Poor’s, and Moody’s.

All transactions in listed securities are settled upon delivery using approved brokers. The risk of default

is considered minimal, as delivery of securities sold is only made once the broker has received

payment. Payment is made on a purchase once the securities have been received by the broker. The

trade will fail if either party fails to meet its obligation.

(c) Liquidity risk:

Liquidity risk is the risk that the Funds will encounter difficulty in meeting the obligations associated with

their financial liabilities that are settled by delivering cash or another financial asset.

The Funds’ policy and the Manager’s approach to managing liquidity is to ensure, as far as possible,

that it will always have sufficient liquidity to meet its liabilities when due, including estimated

redemptions of units, without incurring unacceptable losses or risking damage to the Funds’ reputation.

Liquidity risk is managers by investing the majority of the Funds’ assets in investments that are traded in

an active market and can be readily disposed.


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(d) Market risk:

Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and

equity prices will affect the Fund’s income or the fair value of its holdings of financial instruments.


Interest rate risk is the risk that the fair value or future cash flows of financial instruments will

fluctuate as a result of changes in market interest rates. To manage interest rate risk, the Funds

aim to maintain weighted-average days to maturity, or contractual re-pricing dates if that is earlier,

for debt securities of less than 91 days.

The internal procedures require the Manager to manage interest rate risk on a daily basis in

accordance with the policies and procedures in place. If the interest rate risk is not in accordance

with the investment policy or guidelines of the Funds, then the Manager is required to rebalance the

portfolio within 30 days of each determination of such occurrence.

(ii) Currency risk:

Currency risk is the risk that the value of financial instruments denominated in currencies other than

the functional currency of the Funds will fluctuate due to changes in foreign exchange rates.

While changes in foreign exchange rates can lead to fluctuations in the values of the Fund’s

underlying holdings reported in Canadian dollars, the Manager believes that exposure to foreign

currencies provides an additional source of diversification for the Funds. Exposure to any individual

foreign currency, however, is limited to 50% of the Funds’ net assets.

The Funds’ currency risk is managed on a quarterly basis by the Manager in accordance with the

policies and procedures in place.


Other price risk is the risk that the fair value of the financial instrument will fluctuate as a result of

changes in market prices (other than those arising from interest rate risk or currency risk), whether

caused by factors specific to an individual investment or its issuer or factors affecting all

instruments traded in the market.

Price risk is moderated by the Manager through a careful selection of securities within specified

limits and the Funds’ price risk is managed through diversification of the respective Fund. The

Investment Manager monitors the Funds’ overall market positions on a daily basis and positions

are maintained within established ranges.


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(a) Valuation models:

The fair values of financial assets and financial liabilities that are traded in active markets are based on

quoted market prices or dealer price quotations. For all other financial instruments, the Funds

determines fair values using other valuation techniques.

For financial instruments that trade infrequently and have little price transparency, fair value is less

objective, and requires varying degrees of judgment depending on liquidity, concentration, uncertainty of

market factors, pricing assumptions and other risks affecting the specific instrument.

The Funds measure fair values using the following fair value hierarchy that reflects the significance of

the inputs used in making the measurements.

Level 1: inputs that are quoted market prices (unadjusted) in active markets for identical instruments.

Level 2: inputs other than quoted prices included within Level 1 that are observable either directly (i.e.,

as prices) or indirectly (i.e., derived from prices).

Level 3: inputs that are unobservable.

The objective of valuation techniques is to arrive at a fair value measurement that reflects the price that

would be received to sell the asset or paid to transfer the liability in an orderly transaction between

market participants at the measurement date.

The Funds use widely recognized valuation models for determining the fair value of common and more

simple financial instruments such as money market instruments, futures and forward contracts that use

only observable market data and require little management judgment and estimation. Observable prices

and model inputs are usually available in the market for listed debt and equity securities, money market

instruments and exchange-traded derivatives, such as futures and OTC derivatives such as forward

contracts. In certain circumstances, the Funds may need to apply these observable market inputs to

determine fair value for some money market instruments through the use of present value and

discounted cash flow techniques. The availability of observable market prices and model inputs reduces

the need for management judgment and estimation and reduces the uncertainty associated with the

determination of fair values.

For more complex instruments, the Funds use proprietary valuation models, which are usually

developed from recognized valuation models. Some or all of the significant inputs into these models

may not be observable in the market, and are derived from market prices or rates or are estimated

based on assumptions. Valuation models that employ significant unobservable inputs require a higher

degree of management judgment and estimation in the determination of fair value.

Refer to the Discussion of Financial Instruments and Risk Management following each Fund’s

respective financial statements for further discussion of the respective Fund’s fair value measurements.


69

11. Fair value of financial instruments (continued):

(b) Financial instruments not measured at fair value:

The carrying value of cash, balances due from brokers, subscriptions receivable, interest and dividends

receivable, balances due to brokers, redemptions payable, management fees payable, and distributions

payable, approximates their fair value given their short-term nature. The carrying amount of the Funds’

net assets attributable to redeemable units also approximates fair value as they are measured at the

redemption amount. These financial instruments are classified as Level 2 in the fair value hierarchy

because while prices are available, there is no active market for these instruments.

12. Involvement with unconsolidated structured entities:

The tables below describes the types of structured entities that the Income Fund and the Founder’s Fund do

not consolidate but in which they hold an interest. None of the other funds hold an interest in unstructured

entities. Interest held by the Income Find and Entity Nature and purpose the Founder’s Fund

Investment Funds To manage assets on behalf of Investment in units third party investors and issued by generate fees for the investment the funds. manager. These vehicles are financed through the issue of units to investors.

Income Fund:

Number of Total net Carrying amount investee assets of included in December 31, 2016 funds held investee funds investments

Funds administered by third parties 1 $ 100,137,178 $ 9,305,050


Funds administered by third parties 1 $ 112,604,452 $ 14,681,292


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12. Involvement with unstructured entities (continued):

Founder’s Fund:

The table below sets out interests held by the Founders Fund in unconsolidated structured entities. The

maximum exposure to loss is the carrying amount of the investment in the underlying funds held.


Funds administered by the manager 5 $ 618,015,174 $ 303,162,978


Funds administered by the manager 5 $ 527,347,909 $ 243,678,310

During 2016 and 2015, the Fund did not provide financial support to unconsolidated structured entities and

has no intention of providing financial or other support. The Funds can redeem their units in the above

investment funds at any time, subject to their being sufficient liquidity in the underlying funds.

annual financial statements · arising from other financial instruments is not considered...

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